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Lower latency in the trading room

A good day all in all, with lots of discussion about technologies in the trading room, latency and related matters.

My favourite presentation was from the new CEO of Chi-x, Mark Howarth, who outlined their success in the last few months. More about that later in the week but, earlier in the day, we had a panel comprising Larry Tabb, CEO of TABB Group; Donal Byrne, CEO of Crovil; and Stephane Leroy, Head of Global Sales & Marketing at the Quant House.

The focus of the discussion was latency and what it means, but we went around a whole range of subjects from Direct Market Access to Smart Order Routing, Dark Pools to Algorithmic Trading, MTFs to new Quant Houses (and not Stephane’s) … the dialogue focused upon new business models, redefining old ways of doing business and the future ways of trading.

Future trading comes down to cost, transparency and speed, and doing things in another way.

Doing things in another way means melding the quantitative analytics with the technology in real-time, and that’s what low latency comes down to.

This builds upon the previous dialogue about latency here, but adds the key new dimension of latency arbitrage.

This is the key: if you can find a deal a micro or milli or nano second earlier than another dealer, then you’ve made a gain because you sell that deal a micro or milli or nano second earlier and make a buck, or many bucks.

There’s the rub because firms are seeking a latency delta, so it’s not the latency but the latency lag and arbitrage that makes the difference.

Meantime, all the talk of OMS, EMS, DMA, Algo, MTFs, Multi-asset and more (go figure?) is just talk because it all comes down to the fusion of the human with the technology to create arbitrage opportunities,.

The real-time integration of the man-machine is the true vision of future trading markets and whether you’re a broken model of business, an emerging star or a key long-term player, as long as you can deal in real-time with intelligence then you can make money in these markets.

Even now.

Lesson learned and more to come.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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